Netbook Sales Shrivel as Apple Rolls Out iPad

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Netbook Sales Shrivel as Apple Rolls Out iPad

The iPad isn't considered a netbook, but Apple's month-old tablet is already pounding on the budget computing category, according to market numbers.

Research conducted by Morgan Stanley analyst Katy Huberty shows that netbook sales have slowed down dramatically since January — when the iPad was announced, and shrunk even more in April when the iPad shipped. Fortune's Philip Elmer-DeWitt concludes that Apple's tablet is gobbling up netbook sales.

"As her chart (above) shows, sales growth of these low-cost, low-powered computing devices peaked last summer at an astonishing 641 percent year-over-year growth rate," Elmer-DeWitt said. "It fell off a cliff in January and shrank again in April — collateral damage, according to Huberty, from the January introduction and April launch of the iPad."

Of course, looking at the graph you'll notice a general decline in netbook sales over the course of 2009, so it's possible that the downward trend simply carried over to 2010. However, corroborating the correlation between the introduction of the iPad and shrinkage in netbook sales, Huberty also cited a survey conducted by Morgan Stanley in March, which found that 44 percent of U.S. consumers who were planning to buy an iPad said they were buying it instead of a netbook or notebook computer.

Netbooks — lightweight, 10-inch notebooks costing between $300 and $600 — were a sizzling product category in 2008. That year, manufacturers shipped over 10 million netbooks, and the mini notes continued to sell well in 2009. ABI Research forecasted that manufacturers will ship 200 million ultra-portable devices by 2013, which is about the same anticipated size as the current laptop market worldwide. The ultra-portable device category includes both netbooks and tablets, and at this rate, the iPad just might dominate the mobile PC market.

This is exactly what Steve Jobs had planned all along. Apple resisted producing a netbook, calling the miniature computers $500 pieces of "junk." And when Jobs introduced the iPad, he highlighted its strengths — web browsing, e-mail, watching movies and other tasks — while noting that netbooks "aren't good at anything."